A limited liability company, or LLC, is capable of holding a variety of different assets, including a partnership. Additionally, it is possible for a partnership to become a member of an LLC. How you structure your business and your business holdings will depend on your individual needs. Additionally, your state may require that you make certain disclosures about entity ownership.

What an LLC Is

An LLC is a type of business formation that embraces aspects of both partnerships and corporations. LLC members enjoy limited liability, like corporation owners do. However, they are able to avoid the double taxation situation that corporations face, because LLC taxes pass directly to LLC members, just as they do in partnerships. LLCs are governed by the operating agreement the members execute when creating the LLC. An LLC operating agreement could contain restrictions on the type of property the LLC is entitled to hold, so check your LLC operating agreement.

What a Partnership Is

A partnership is a single business controlled and owned by two or more people. Partnerships can operate without filing any formal documents with the state and without even executing a partnership agreement detailing the terms of ownership. Because management and ownership rights can be complex, a partnership agreement is always recommended. In addition to general partnerships, where all partners share equally in the profits of the business, you can form a limited partnership where some partners have limited liability but also limited control and ownership rights.

LLC Asset Ownership

An LLC is capable of owning subsidiaries such as other LLCs or a partnership. When an LLC holds a partnership, the LLC becomes liable for the conduct of the partnership. Although the LLC members will enjoy limited liability, the LLC itself must answer for the conduct of the partnership and satisfy any debts the partnership incurs. If you wish to separate the liability of the partnership and LLC, you could allow the entities to continue to operate separately with common partners or members. Additionally, it is possible to transfer the assets of the partnership to an entirely new LLC.

Structuring Your Business

If your LLC acquires a partnership, you will need to update your LLC operating agreement as well as the partnership's operating agreement to reflect the change. The operating agreements should clearly state how the ownership is structured and who will be involved in the management, ownership and control of the two entities. You may even consider allowing the partners from the partnership to be admitted as members of the LLC. Depending on the laws in your state, you may need to file a document with your secretary of state reflecting the change of ownership.

About the Author

Louis Kroeck started writing professionally under the direction of Andrew Samtoy from the "Cleveland Sandwich Board" in 2006. Kroeck is an attorney out of Pittsburgh, Pennsylvania specializing in civil litigation, intellectual property law and entertainment law. He has a B.S from the Pennsylvania State University in information science technology and a J.D. from Case Western Reserve University in Cleveland, Ohio.